FOMC Meetings, Schedule, and Statement Summaries
Fed Kept Its Benchmark Rate at 2.0 Percent
The Federal Open Market Committee holds eight meetings per year. It executes monetary policy for the Federal Reserve System, the central bank of the United States.The FOMC reviews economic conditions each time it meets. Based on its review, it will decide whether to use expansionary or contractionary monetary policy. It issues forecasts at four of those eight meetings.
The FOMC also changes the fed funds rate. This is one of the most important leading indicators. It tells you which way the economy will go. If the rate is raised, expect slower growth. It will also raise the cost of home mortgages, loans, and credit cards. Take these five steps to protect yourself from fed rate hikes.
Even if the FOMC holds the rate steady, the meeting minutes give you a high-level analysis of the U.S. economy. As a result, the stock market reacts immediately to the FOMC meetings, announcements, and minutes. Here is the 2018 meeting schedule. It indicates which meetings issue updated forecasts. It is followed by summaries of each past meeting since June 2013.
2018 Meeting Schedule
January 30-31: The Committee left the fed funds rate at 1.5 percent. It will allow $12 billion of Treasury securities to mature each month without replacing them. It will do the same with $8 billion of mortgage-backed securities. The FOMC issued its Statement on Longer-Run Goals and Monetary Policy Strategy, which confirmed its expectations. It was Janet Yellen's last meeting as Fed Chair. Press Release.
March 20-21: The Committee raised the fed funds rate to 1.75 percent. This was the first meeting chaired by President Trump's appointee, Jerome Powell. He is expected to continue recent Fed policy since he's been a Fed Board member since 2012. Press Release. Forecast.
May 1-2: The Committee kept the rate at 1.75 percent. It was encouraged by good employment numbers and stable economic growth. The market expects the Fed to raise the rate two more times in 2018. Inflation is expected to accelerate, meeting the Fed's 2 percent target in 2018. The Fed will continue to wind down the $4 trillion in holdings it acquired during quantitative easing.
June 12-13: The FOMC raised the fed funds rate to 2.0 percent. It is encouraged by stable economic activity, strong labor market conditions, and inflation near its 2 percent target. Press Release. Forecast. For an analysis of the forecast, see U.S. Economic Outlook.
MOST RECENT MEETING July 31-August 1: The Fed kept its benchmark rate at 2.0 percent. It acknowledged that the economy is strong and inflation is at its target rate. Press Release.
- September 25-26
- November 7-8
- December 18-19
January 31-February 1: The FOMC kept the fed funds rate at 0.75 percent. It expects to raise the rate to its goal of 2 percent in 2017. That assumes unemployment remains low and inflation approaches its 2 percent goal. The Fed will maintain its current open market operations policies. That means the Fed will roll over its $4 trillion worth of securities holdings until the fed funds rate normalizes at 2 percent. Press Release.
March 14-15: The Committee raised the fed funds rate to 1 percent. Members were confident that the economy would continue to strengthen. Inflation is close enough to the Fed's target of 2 percent. Press Release. Forecast.
May 2-3: The Fed kept the fed funds rate at 1 percent. It said that economic growth was a little slow in the first quarter. It expected growth to resume a faster pace in the future. Press Release.
June 13-14: The Committee raised the fed funds rate 1/4 point to 1.25 percent. It said the economy and employment are growing steadily. Core inflation is just under the Fed's 2 percent target.
The Fed also outlined how it will begin reducing the $4.5 trillion in securities it holds on its balance sheet. It acquired them during quantitative easing. It will allow $6 billion of Treasurys to mature each month without replacing them. Each month it will allow another $6 billion to mature until it's retiring $30 billion a month. The Fed will follow a similar process with its holdings of mortgage-backed securities. It won't replace an incremental $4 billion a month until it retires $20 billion.
July 25-26: The Committee kept the fed funds rate at 1.25 percent. Members are encouraged by the steady economic growth. They didn't need to raise in July since they just raised the rate in June. Some members would like to see inflation closer to the 2 percent target before raising again. Others want to hold the course to prevent financial instability. All members agree that the Fed should start reducing its Treasury holdings soon. Press Release. (Source: "Fed Minutes: Fed Split Over Path of Rate Hikes," CNBC, August 16, 2017.)
September 19-20: The FOMC maintained the fed funds rate at 1.25 percent. It will begin reducing it holdings of Treasury securities in October. It will use the process outlined in its June meeting. Press Release. Forecast.
October 31-November 1: The Committee kept the fed funds rate at 1.25 percent. It would like to see inflation closer to its 2 percent target. It will continue reducing holdings of Treasury securities as they mature.
January 26-27, 2016: The Committee kept the fed funds rate at 0.5 percent. The Fed expects to raise rates three more times, at a quarter point each time, in 2016. Press release.
March 15-16: The FOMC kept interest rates the same. It acknowledged that low oil and gas prices were keeping overall inflation below its target. Many members worried about weak exports and business spending. Therefore, the FOMC announced that it will raise rates "gradually," and that the fed funds rate will remain below the normal 2 percent rate "for some time." Press release. Forecast.
April 26-27: All but one member voted to keep the fed funds rate the same. Kansas City Bank President Esther George voted to raise the rate to 0.75 percent. The Committee was optimistic about economic growth, consumer confidence and job creation. It worried about weak exports, consumer spending and business investment. It expects inflation to rise to its 2 percent target "in the medium term." It expects the fed funds rate will remain low "for some time." Once it begins to raise rates, it will do so "gradually." That means it probably won't raise rates three more times in 2016, as it planned in January.
June 14-16: All members voted against raising rates. The stock market rose briefly in reaction. The Committee said that both job growth and inflation were weaker than expected. The Fed forecast 2 percent growth in 2016. Its prior forecast was 2.2 percent. It predicted higher inflation, at 1.4 percent instead of its previous forecast of 1.2 percent. Press Release. Forecast.
July 26-27: The FOMC kept the fed funds rate at 0.5 percent. It was confident about raising them this fall, possibly in September. Members were less worried about the negative impacts of Brexit, low oil prices and China's economic growth. They were pleased to see a stronger job market and improvements in retail sales. Press Release.
September 20-21: The FOMC kept the rate at 0.5 percent. Three members voted to raise it. But other members were concerned that the core inflation rate was too far below its target rate of 2 percent. Members were encouraged by healthy economic growth and a strong jobs market. Press Release. Forecast.
November 1-2: The strong October jobs report encouraged the FOMC. Nevertheless, it did not raise rates. Inflation remained below the Committee's 2 percent target. Two members voted to raise the rate. If growth remained strong, the Committee would be likely to raise rates in December. Press Release.
December 13-14: The FOMC raised the fed funds rate by a quarter point, to 0.75 percent. It was satisfied with the rate of economic growth, and expected inflation to reach its 2 percent target in 2017. Some Committee members were concerned that continued low interest rates would create a liquidity trap. Press Release. Forecast.
January 27-28: The FOMC said it would raise the fed funds rate in six months. It was confident the U.S. economy would continue to grow strongly, despite weakness in foreign markets. It expected inflation to head back toward its 2 percent target rates once oil prices returned to normal. Press Release.
March 17-18: The Committee wanted to see employment remain strong and inflation rise a little higher before raising the rate. It did not rule out raising it in June if conditions allowed. Press Release. Forecast.
April 28-29: The FOMC would like to see economic growth stronger before announcing a rate increase. If growth strengthened by the June meeting, the Committee could raise it as soon as July. But most analysts expected it to occur in December or later. The FOMC did say that it expected inflation, and expectations of inflation, to approach its target "in the medium term." Press Release.
June 16-17: Even though the Committee would prefer the fed funds rate to return to a normal 2-3 percent range, it seemed more worried about jeopardizing the U.S. recovery by raising rates too soon. Therefore, it continued to signal a rate increase might be possible three to six months out. It did not comment on asset bubbles in the bond market. It took no responsibility for the strength of the dollar. The Committee also lowered its forecast for inflation. Press Release. Forecast.
July 28-29: The FOMC gave its most upbeat assessment of the economy in a long time, saying growth is "moderate" and that it only needed to see "some further improvement" in employment. The June unemployment rate is 5.3 percent, well below the Committee's previously-stated target of 7 percent. That made July's employment report a crucial indicator as to whether the FOMC would raise rates in September. Its biggest concern was that inflation was "only" 1.7 percent, below its 2 percent target. Here's why a little inflation is good.
September 16-17: The FOMC left rates at current low levels. It said the economy was not strong enough to raise them yet. The Committee expressed concern over low exports and weak inflation. The strong dollar caused both by making exports expensive and imports cheap. The FOMC announced it will keep the rate lower than the normal 2 percent even after employment and inflation are in a healthy range. Press Release. Forecast.
October 27-28: The FOMC stated the economy was in a healthy growth range, but it would like to see higher inflation before it raised rates. It said it might raise rates in December. Press Release.
December 15-16: The FOMC raised the fed funds rate a quarter point, to 0.5 percent. It promised to continue raising rates in 2016, as long as the economy continued to improve. It raised the discount rate by a quarter point to 1 percent. It raised the interest rate paid on excess and required reserves by a quarter point to 0.5 percent. Press Release. Decisions Regarding Monetary Policy Implementation. Forecast.
January 28-29: Federal Reserve Chairman Ben Bernanke's last FOMC meeting ended, not with a bang, but a taper. After creating an alphabet soup of programs to fight the 2008 financial crisis, Chairman Bernanke's final action to further reduce quantitative easing was a bit of a let-down. The Fed promised to reduce its purchases of long-term Treasurys and mortgage-backed securities by another $10 billion a month. That meant it would only buy $65 billion a month, instead of $85 billion. Press Release.
March 18-19: Federal Reserve Chair Janet Yellen's first news conference. The Fed could raise the fed funds rate as soon as six months after the end of QE. The Dow immediately dropped 200 points. Why? Traders feared higher interest rates because it means capital is more expensive, which could slow economic growth. But traders overreacted. First, the FOMC said it would taper another $10 billion a month from its purchases of Treasury notes. That means the Committee wouldn't start raising rates until July 2015 at the earliest.
That mid-2015 timeframe was consistent with what it had said earlier. In addition, the FOMC would no longer use an unemployment rate of 6.5 percent to determine if unemployment is low enough. That's because the unemployment rate was already 6.7 percent, and headed lower. But the jobs situation was not robust. Yellen talked about the so-called real unemployment rate, which was 12.6 percent. It included 7.2 million part-time workers who would prefer a full-time job but couldn't get one. She said that number was too high.
April 29-30: Economic growth looked mildly positive, so the Fed reduced its purchases of Treasurys to $25 billion a month. It reduced its purchases of mortgage-backed securities to $20 billion a month. Press release.
June 17-18: The Fed cut another $10 billion from its purchases of Treasurys and mortgages. The Fed was buying $20 billion in U.S. Treasurys and $15 billion in mortgage-backed securities. Its outlook on the economy is conservatively positive. It will keep the fed funds rate at its current near-zero level "for a considerable time" after it finally ends QE, especially if the core inflation rate remained below 2 percent. It was just at 2 percent. Press Release. Forecast.
July 29-30: The Fed reduced its QE bond purchases by another $10 billion a month. It will buy $15 billion in Treasury bonds and $10 billion in MBS. It's on schedule to wind up QE by October. The Fed funds rate will stay at zero percent "a considerable time after the asset purchase program ends." The Fed is fairly happy with economic performance, but would like the employment picture to be better. Press Release.
September 16-17: Fortunately, the FOMC remained on course. The Fed reduced its QE bond purchases by another $10 billion, buying $10 billion in Treasury bonds and $5 billion in MBS. It would end the program in October. It wouldn't raise the fed funds rate until "considerable time" had passed, and only if the economy was strong enough. Most analysts agreed this meant mid-2015. Press Release. Forecast.
October 28-29: As expected, the FOMC ended its QE bond purchases. It has nearly doubled its holdings of securities, mostly Treasurys and mortgage-backed securities. Its holdings rose to $4.482 trillion from $2.825 trillion in 2008. It would continue purchasing new securities to replace its holdings, but wouldn’t increase its holdings. Eventually, once it raised the fed funds rate to 2 percent, it would gradually reduce its holdings by not replacing them when they matured. Press Release.
December 16-17: The Fed said it is prepared to raise rates only when the economy improves enough to warrant it. Most members expect this will happen sometime in the middle of 2015, although there is a wide divergence of opinions among members. It doesn't expect it to happen within the next few meetings. Press Release. Forecast.
2013 Summaries of Key Meetings
December 17-18: The Fed will begin tapering QE in January. This means the Fed will cut back on its purchases of long-term Treasurys and mortgage-backed securities. It will buy $75 billion a month (instead of $85 billion) until at least the March 18-19, 2014, meeting. It could taper even more if three key indicators exceed the Fed's targets of:
- 7 percent for the unemployment rate. (It hit 7 percent in November 2014.)
- 2-3 percent for gross domestic product growth. (It reached 3.6 percent in the third quarter 2014.)
- 2 percent core inflation rate. (It fell to 1.7 percent in October 2014.)
- The fed funds rate and the discount rate would remain between zero and 0.25 percent until 2015, and below 2 percent through 2016.
This was Bernanke's last press conference. He congratulated Congress on passing a budget. That indicated a renewed sense of cooperation that could boost confidence in the economy. He added that austerity measures, such as sequestration, forced the government to shed 600,000 jobs in four years. In the prior recovery, the economy added 400,000 jobs during the same time period. Press Release. Forecast.